Sunday, August 12, 2007

Six Attributes to Intelligently Allocating Capital

Market outperformance requires a disciplined and unemotional approach. Going left when the herd is going right is the most difficult process to undertake. It requires an unwavering conviction in your data and reasoning.

"You are neither right or wrong because the crowd disagrees with you. You are right because your data and reasoning are right." - Ben Graham

Thus, in studying the greatest (Buffett, Schloss, Miller, Pabrai), I see six fundamental characteristics that they methodically practice.

Each and every day, I put these six principles to work for the Gad Partners Fund.

1. A Sound Investment Philosophy (Ben Graham, Value Investing)
2. A Good Search Strategy
3. Ability to value a business and assess the quality of management.
4. The discipline to say no.
5. Patience
6. Courage to make a significant investment at the maximum point of pessimism.

1 comment:

Unknown said...

Hi Sham
What I have been missing is the sound search strategy. The stock screeners only returns the bulk of stocks in distressed sectors so I usually stick with large cap stocks and wait for them to sell at discount. The rewards have been good but most of the assets I leave for stock picks remain unallocated. Do you have any recommendation for stock discovery resources?

http://www.valueinvestmentblog.com/